You Started Your Own Business, What Happens When You're Ready to Stop?
People procrastinate creating their succession plans for plenty of reasons: they're too busy, they don't want to tackle a big project, they'd rather not make decisions for the future. But there's one hurdle that can seem impossible when it comes to succession planning.
What if there is no one to succeed you?
This may happen in a small family business, but it can also occur in larger firms. If you decide not to create a succession plan, you're essentially deciding to let the company dwindle when you leave. It's that simple.
No one in the family is interested.
When you've put your heart and soul into growing a family business, it can be discouraging to realize that no one in the family wants to succeed you. They may all have plans and careers of their own. In some cases, you might have family members who still work for your business but who don't want to be in charge.
No one in the family is qualified.
On the other hand, you may have members of your family who would like to succeed you, but they don't have the skills or experience to be successful.
No one currently in the company seems to be the right fit.
Even if the family isn't involved, succession can seem more comfortable when someone you know well takes the reins. But what if no one om the company seems right for the job?
The following steps can help you plan your company's succession, even if you don't currently have a successor.
Establish a timeline.
By starting your succession planning with an established timeline, you can narrow your list of successors, institute transition periods, and impose accountability on each step of your process.
Regardless if your retirement is three years or thirty years away, you should have a good idea of when you'll want to move on. Even if you never want to retire fully, you ought to have someone in place who can take over if you become incapacitated.
Focus on Skills Instead of Relationships
Friendship and family relationships often impose themselves on your decisions when it comes to business succession. Instead of thinking about these relationships, consider where you want the business to be in five years.
When you have a clear vision of your company's future, think about what kinds of skills and experiences will help the business to get there. For example, if you'd like to see your business develop innovative new products, you may need to tap a leader with significant research and development achievements.
Find the Right Fit
Once you have a clear vision of the new leader's role and function, it's much easier to seek candidates. You might be surprised how much easier it is to seek a successor based on traits rather than on relationships. When personal feelings and relationships take a backseat to skills and experiences, business owners often feel a burden lifted from their shoulders.
You may find your successor in any number of places. They may have been working with suppliers or even competitors. You may have found them through mutual connections or even through an online listing or recruiter. Eventually, you'll find the right fit, and you can begin the transition.
Start the Transition
Ideally, you'll be able to transition control of the company at a measured, even pace, slowly turning the reins over and giving your successor challenges one at a time. Since we don't live in an ideal world, you should be prepared with contingency plans.
For example, some business owners have to exit the company suddenly due to an accident or injury. When this happens, successors must rise to the occasion and do the best they can. The more work you've put into your succession planning, the more likely it s that your successor will thrive in such a circumstance.
A business succession plan makes provisions for risk management, personnel changes, the retirement of the previous owner, valuation and buy/sell agreement information, communication of the strategy to all stakeholders, and legal considerations. With so many aspects of the business carefully managed and considered, your successor will be well-positioned to succeed and take the company where you intend it to go.
Seek Expert Assistance
Expert, outside help is invaluable when it comes to succession planning. You're busy with the day-to-day operations of your business, and you may not have the time to consider all the logistical, legal, and financial factors affecting your succession. To learn more about succession planning, or to speak with us about any other business topic, set up a consultation with us a Croghan.